Sugar Prices Jump as Wildfires in Brazil Damage Some Sugar Crops
Sugar prices rose today due to concerns over drought-induced wildfires damaging crops in Brazil’s top sugar-producing state, São Paulo. While these developments support higher prices, expectations of a bumper sugar crop in India, driven by above-average monsoon rains, could temper the bullish trend. India’s ongoing export restrictions, global supply concerns, and mixed production forecasts from Thailand and the USDA further complicate the market outlook.
Sugar prices extended their gains today on reports that drought has caused wildfires and damaged some sugar crops in Brazil’s top sugar-producing state of Sao Paulo. Optimism that above-average monsoon rains in India will lead to a bumper sugar crop is a bearish factor for sugar prices.
The Indian Meteorological Department reported Monday that India received 632.5 mm of rain during the current monsoon season as of August 19, 3% more than the comparable long-term average of 611.8 mm. India’s monsoon season runs from June through September.
The Indian Sugar and Bio-energy Manufacturers Association (ISMA) on July 3 reported India’s 2023/24 sugar reserves at 9.1 MMT and reported a surplus of 3.6 MMT. India has restricted sugar exports since October 2023 to maintain adequate domestic supplies.
India allowed mills to export only 6.1 MMT of sugar during the 2022/23 season to September 30 after allowing exports of a record 11.1 MMT in the previous season. On August 8, the ISM said it would maintain its curbs on sugar exports to ensure adequate domestic supplies and boost India’s ethanol output.
Separately, the ISM reported on May 13 that India’s 2023/24 sugar production from Oct-Apr fell -1.6% y/y to 31.4 MMT. Also, the ISM on July 30 projected India’s 2024/25 sugar production would fall by -2% y/y to 33.31 MMT.
Record heat in Thailand that may damage the country’s sugarcane crops is bullish for sugar prices. On May 6, Thailand’s Meteorological Department said that more than three dozen of Thailand’s 77 provinces posted record-high temperatures in April, with new highs beating records as far back as 1958.
Sugar millers in Thailand are reporting the lowest yield from crushed cane this year in at least 13 years. However, Thailand’s government on April 22 estimated that Thailand’s 2023/24 sugar production from Dec-Apr 17 was 8.77 MMT, above a Feb estimate from the Thai Sugar Millers Corp for sugar production of 7.5 MMT.
Thailand is the world’s third-largest sugar producer and the second-largest sugar exporter. The USDA, in its bi-annual report released on May 23, projected that global 2024/25 sugar production would climb +1.4% y/y to a record 186.024 MMT and that global 2024/25 human sugar consumption would increase +0.8% y/y to a record 178.788 MMT.
The USDA forecasted that 2024/25 global sugar ending stocks would fall -4.7% y/y to a 13-year low of 38.339 MMT. In a supportive factor for sugar prices, the International Sugar Organization (ISO) on June 10 raised its global 2023/24 sugar deficit estimate to -2.95 MMT from a February estimate of -689,000 MT.
ISO also raised its global 2023/24 sugar demand estimate to 182.2 MMT from 180.4 MMT, citing upward revisions to India’s consumption figures.
Source Link : https://www.inkl.com/news/sugar-prices-jump-as-wildfires-in-brazil-damage-some-sugar-crops
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